Workers Need a Minimum Wage Now?

It’s available here. Anyway, I’ll reproduce it in full below. Haven’t done a critique for a long time!

THE POOR do not need perpetual handouts that make us feel good about ourselves, but which do nothing for their next generation, and the generation after them. We need policies that work for them.

No comments about that. Just a remark: “Policy” is just another word for “government intervention”.

One such policy, which I believe is long overdue, is a minimum wage framework. Because when we allow companies to pay pittance, we demean the work of another’s hands.

Who allows companies to pay pittance? Which company? If you do know which companies pay pittance, you have the right (and perhaps self-imposed duty) to boycott their products.

It’s worth repeating the last section here in order to see more clearly what the author has “argued”. Let’s see:

One such policy, which I believe is long overdue, is a minimum wage framework. Because when we allow companies to pay pittance, we demean the work of another’s hands. By allowing it to go on for as long as it has, we have inevitably demeaned their personhood. And we continue to scorn their dignity by saying that they are not worth that much. We say to them that they are negligible. That they are of little, or no value at all.

In the first place, the author originally wants to demonstrate why a minimum wage policy works for the betterment of the poor. Towards the end, however, the author “concludes” that “We say to them that they are negligible. That they are of little, or no value at all.” I think that’s a very far cry from what the author originally wants to argue.

Secondly, let’s analyze the author’s argument structure. “When we allow companies to pay pittance”, it does not follow that “we demean the work of another’s hands” – there is no proximity between the two events. Following that, the author introduces a new premise on our behalf – that we are “saying that they are not worth that much”, so on and so forth. In the end, the author concludes that “They are of little, or no value at all”.

In short, the passage is not admissible as a piece of argument. It is a piece of rhetoric.

Minimum wage is not an “ideal policy”. It is a necessary policy that must be put in place to act as a check and balance on capitalism, which left unregulated will and has manifested in uncontrolled greed, where the poor cannot afford a RM3.50 meal, and the rich pay RM200,000 for a two-seater sofa set.

What does “ideal” mean? I’m not trying to unduly criticize the author, but to point out to you that “ideal” is a slippery concept. In economics, when one speaks of an “ideal” policy, he normally means one which does not distort people’s behavior. The most quoted example is a lump-sum tax.

Secondly, the notion of a “necessary policy”. The author claims that minimum wage is a necessary policy, but does not proceed to justify that claim. I’ll do some homework for the author. Consider the statement “If minimum wage is not implemented, some undesirable outcomes will result.” I take this to be the author’s position. In order to demonstrate that minimum wage is “necessary” to prevent undesirable outcomes, the author must proceed prove the above statement. Unfortunately, the author did not do this in the article. As of the above, the author too did not demonstrate convincingly that a minimum wage policy works for the betterment of the poor.

So, I say to this government and to the Human Resources Ministry: For goodness sake, if you want to regulate something, regulate the right things. Impose a minimum wage now, because relying on the conscience of big business isn’t going to take the thousands of lowly paid workers out there very far.

Again, “right” and “conscience” are very slippery concepts. Again, the last statement is not an argument, but a piece of rhetoric, because the author does not demonstrate sufficiently the causality that “Impose a minimum wage now” follows from “relying on the conscience of big business isn’t going to take the thousands of lowly paid workers out there very far”. If you are unsure why this is so, apply the analysis above in this case without loss of generality.

And please, stop mouthing ridiculous statements like “Implementing minimum wages is not feasible.” Not feasible for whom? The Federation of Malaysian Manufacturers? The Malaysian Employers Federation?

Is there an argument, anyone?

Jerit, an NGO that has been petitioning for a minimum wage since the 90s, recently launched a cycling campaign starting from Alor Star on Dec 3, culminating in the handover of a memorandum to the prime minister on Dec 18. Their goal is to raise awareness on the need for a minimum wage policy along the way. If you can’t cycle, go adopt a cyclist now at www.jerit.org .

It’s time to empower the poor, and to restore their dignity by affirming the worth of their labour.

That wraps up the article. Now it’s time to have a little bit of economic lesson! Is it true that minimum wage will “empower” the poor by raising their wages?

What is true is that, when minimum wage is first imposed, the poor who are working will see their wages rise. The poor who do not work do not see wage increase (in fact, some in the group might have no income at all!).

What will happen after some time? Most people think that minimum wage will cause the poor to become richer, and that’s all. If you’re business-minded, or have done managerial accounting, you should know that cost will rise as long as the minimum wage is above the prevailing wage. Will you do nothing if you run a business? That’s hardly sensible; you will start to look for ways to reduce cost – hire better educated and more productive workers, substitute machines for labor, or worse, go underground – hire illegal immigrants. Or perhaps move overseas; after all, China and Vietnam are nearby and their markets are far larger than Malaysia’s.

To put this in a graph of labor supply and demand, here it is (click to read the Wikipedia article):

The prevailing wage is the point marked “equilibrium”, where supply and demand curves for labor intersect. If a minimum wage is set, demand for labor will drop, supply of labor would be greater as a result of higher wage, and unemployment would result.

Who will be left behind, in the end? The poor, who minimum wage is suppose to help! You might want to see this sad story in real action in the United States. It’s nice (though unpleasant in reverberation) to wrap up with a video:

Institutionalization

Well, forget about definitions as offered in journals or textbooks,

He’s just institutionalized…The man’s been in here fifty years, Heywood, fifty years. This is all he knows. In here, he’s an important man, he’s an educated man. Outside he’s nothin’ – just a used-up con with arthritis in both hands. Probably couldn’t get a library card if he tried…these walls are funny. First you hate ‘em, then you get used to ‘em. Enough time passes, it gets so you depend on ‘em. That’s ‘institutionalized’…They send you here for life and that’s exactly what they take, the part that counts anyway.

A Survey

I’d like to hear from you whether

1. I should write shorter posts, or maintain my current style of long treatise; and
2. I should create a new blog for this purpose, or to use this one.

I’d very much appreciate your feedback. Thank you!

Succumbed to Temptation

Well, normally I don’t feel obliged to reply to tags, save for limited circumstances which coincidentally further my political objectives. Maybe today is such a case

RULE: Each player of this game starts off with 15 weird things / habits / little known facts about you. People who get tagged need to write a blog of their own 15 weird habits / things / little known facts as well as state this rule clearly. At the end, you need to choose 10 people to be tagged and list their names. NO TAG backs!

Strong warning: Read until the end! Half way through and you might lose a friend! Nevertheless, you might lose me even if you keep on reading anyway

1. My ambition was to become a Philosopher King.

   That’s a very long story, but I’ll try to keep it short. The first novels I’d ever read all concern battles and domination of one over another. (Maybe two names will give you a hint: Water Margin and Three Kingdoms.) And the principles of life I perceive, unfortunately, to be that the superior has the duty to ‘civilize’ the inferior, and to eliminate evil people from this world, even this means the majority.

   So I proceeded to read about nuclear weaponry, supposedly the most efficient way of killing people, and particularly that of neutron bombs, which kill people but leave physical resources intact, enable a hardened forces to capture these materials to manufacture even more weapons, effectively serving as force multiplier. From there, I studied existing companies that manufacture such weapons (e.g. Westinghouse Nuclear), and means to acquire them. Not too bad for a 10-year-old. And needless to say, my parents were not very impressed when I discussed production-line liquidation techniques over dinner.

   Fortunately all such dreams of mine did not come true. But it might be, someday. *laughs evilly*

2. I didn’t think Saddam Hussein is as bad as many people thought him to be.

   I still don’t think so.

3. My such subliminal motivation motivates me to do some seemingly incoherent things.

   Warfare? Physics? Economics? Demography? Yea. You need to know all that to wage a total war. After all, knowing which kind of viruses to use against a certain stock of people ensures the most effective elimination.

4. I’m very good at rationalization.

   No? Read the above again. The fact is, I’m interested in almost anything mechanical, not just weapons, but things from Apollo mission to my own A-TRV G4. And oh, what does set theory, logic, linguistics and investment share in common? Set theory is the foundation of mathematics, logic and mathematics are inseparable (if you believe in Russell the philosopher), linguistics is the study of rule-based language, and investment is one of the fields which reasoning plays a paramount role!

   And I love to exaggerate, which unfortunately, almost always backfired. Why, last time, I told my friends, there’s a rape case around here, and they screamed, without allowing me to continue, “the hill has been stripped of her trees, and shamelessly molested.” T_T

   There’s in my opinion a more extreme case. Not “a”, but “many”. When I was 10, I used to sneak out of home and went around the island, which takes about four hours, under the pretext of “photocopying a textbook”. Then upon return, I’ll say, it’s too bad but the machine broke down. .___.

   By now, you should know what word to substitute for “rationalization” – l-y-i-n-g.

5. I want to be a recluse.

   I had been criticized many times over my such (real) ambition, that I would become a social parasite. Sorry, but in my opinion, comparatively speaking, a socially active person might be more a parasite than a recluse. What’s wrong in spending more time thinking and working rather than socializing and having fun? And, if you are too naive to believe that a recluse is someone who lay around and have nothing better to do: being a true recluse, who stays far away from the urban area, would spend far more than an ordinary urbanite to obtain a similar standard of living. It’s a bit extreme, again, but consider Howard Hughes. I’m referring to the real one, not the “The Aviator” character.

   无为, 非无所不为, 乃明诣天地之造化, 可守颜渊之贫, 亦可乘子贡之富而济世也!

6. Although I appear to admire nobody, but I do admire many heroes.

   Perhaps that’s so because, being like Frank Lloyd Wright, I am so narcissistic that I could never acknowledge my idolization of someone. But I do. Search my Facebook profile for some hints

7. I am very rebellious.

   Huh? Yes, that’s true. I appear to be a good boy because there’s not much need for me to be openly rebellious these days. But I’m ready to flex my temper when needed to. As a certain philosopher said, we are compassionate people, but if needed, we will kill without blinking an eye. *winks*

   The last ‘war’ lasted from 2003 till 2006, and its effects had been terrible. We still have not quite gotten over it even today. The source? Outright incompatibility in beliefs. The excuse? Something over my head.

   Now everyone knows where to stop when talking with me. Period.

   Well, it’s much more than hair, just in case you wondered. That’s just one of it. Remember how the British forces the rulers to accept “advisers”?

8. I don’t have a driving license.

   That’s despite having driven a bus at an age of 12, and got into my first accident at an age of 15, and designed comprehensively my first car somewhere in between.

   Why? Well, the philosopher king will tell you, you don’t have to get an ATP even if you own an AC-101. I will say frankly that it’s a direct consequence of the 2003-6 war I mentioned.

9. Until now I still have no intention of falling in love.

   Sad, but I’m sad to report that it’s true. Maybe I’m too preoccupied by all the non-romantic undertakings; or perhaps I’m abnormal and need some estrogen therapy. [No~ Estrogen therapy will cause impotence! ] But just let me finish all the important stuff. If you’re like me, you won’t have mood to fall in love. Or the hormonic surge.

   Perhaps this is strong enough to clear all the inquiries generated by my change of status in Facebook. I do know many people care for me, and I really appreciate it!

10. I am a vegetarian.

    No, that’s not why I have no desire for falling in love. These are some reasons. I asked to be a vegetarian by the age of 10, and over half in my family voted “Aye”.

    Sorry if my conviction has caused you much inconvenience! But sometimes, you just have to have the gut to uphold your conviction. Even more so over well-reasoned conviction.

    Still believe I’m a Philosopher King?

11. I want to be a capital allocator and protector, but would only selectively discuss it.

    Selectively, in the sense that I will selectively discuss (i) with people and (ii) over the subject proper of investing. Not many people concur with the philosophy I’m having, but it doesn’t matter. Nor does it matter whatever your thoughts towards my belief be, if it could not be conveyed to me through facts and reasoning. And speaking from experience, too many people just don’t get the point even though it’s very simple. And if you see I’m not interested, please stop prompting me for reply. [Hint: A common question of this form is "What do you want to do next time?"] I’d be obliged to hear from you though, if what you have to share is not too long.

12. I personally know a billionaire.

    More than ‘know’, in fact.

    Incidentally, points 5, 7 and 12 together makes a big story.

13. Despite having said much, there is still much I wouldn’t say.

    Maybe it’s my life experience that develops my tendency of “keeping something away”. Aside from such facts as bank account password, there are still things I would not say. To my best belief (but I can’t add “knowledge”), such withholding of information should not impede your full understanding of me. But asymmetric information always imply something I guess?

    I’m still yet to get over it. I hope I can.

14. The last point means, even if I cherish friendship a lot, you probably won’t notice it.

15. Now the climax. I fear two things.

Hello, anyone still there? True to my belief, rules are made to be broken, and I am glad to break it. I choose not to nominate anyone to continue this, for the time being